Technology

How to deliver a personalized in-store customer experience without compromising trust

Learn why retailers and customers alike are better served by bringing data out of the darkness and into the light.

Photo by istock.com

January 7, 2022 by Bobby Marhamat — CEO, Raydiant

Many customers see data-driven personalization and privacy as diametrically opposed forces. And yet, despite the natural inclination to keep one's shopping preferences and habits close to the vest, customers are willing to give up some measure of privacy so long as they get something in return—namely, greater convenience and savings.

Retailers are constantly seeking the sweet spot between customers' personal boundaries and data's massive potential to improve the in-store experience. With data's unrivaled power to deliver personalized discount offers, product recommendations, and other benefits that enhance the in-store experience, retailers who fail to use data in a meaningful way will lose business.

Based on our State of the In-Store Experience (2021) report, consumers decide where to shop based on the totality of the in-store experience. 82% of shoppers will return to your store again if the sum of their in-store experience is positive. If you're not leveraging data to compete with online and brick-and-mortar retailers, your in-store experiences will suffer.

The question then becomes: how can retailers deliver the benefits of personal data to their customers without violating those customers' trust?

Do: Deliver tangible value using data

Shoppers will note a well-conceived design scheme. They enjoy interacting with the latest interactive display and certainly appreciate a quick checkout process. Still, most shoppers will judge your organization primarily on your ability to deliver competitive prices and unique discounts that they cannot receive elsewhere.

When we asked 1,000 consumers what brick-and-mortar retailers can do to attract their business, the second-leading response was to offer "exclusive discounts" that are not available online. Even better than discounts native to your stores are discounts native to the specific shopper.

Per McKinsey, data-driven improvements in retail locations have saved as much as 12% in per-store costs while also reducing wait times and employee availability to customers. Organizations that see price as a key differentiator may choose to pass such savings to customers.

Retailers are also delivering personalized discounts made possible through consumer data. As retailers (or their algorithms) learn shoppers' buying habits, they may direct shoppers' attention to discounts and promotional offers that align with their purchasing preferences.

You'll hear nary a complaint about privacy violations if you are able to provide tangible savings to your customers using their own data.

Don't: Be furtive in your data collection practices

Retailers and their customers have come to something of an unspoken agreement. Shoppers generally assume that their data is being collected and used for some purpose. The unspoken agreement, then, is that the data is being used within the reasonable parameters of decency.

As a retailer, ask yourself this: why does this agreement remain unspoken? If all parties know that data collection is happening, why not be open about it?

Retailers have several reasons to be upfront about the ways that they use their customers' data. Deloitte notes how perceived privacy violations by retailers, should they come to light, compromise future revenues. Losing customers' trust does not always have a precise cost, but rest assured it is a hefty one.

Consumer privacy laws are also adapting to catch up with the age of Big Data. Consumer protection laws from California to Virginia will soon come into effect, giving shoppers greater powers to sue retailers who violate legal standards of privacy. The cost of handling consumer data in a fast-and-loose manner could soon become apparent to retailers inundated with civil lawsuits.

Fortunately, there is a clear way to avoid both perceived violations of consumer trust and potential lawsuits. As the National Retail Federation explains, retailers can generally avoid litigation by publishing privacy policies that explain precisely how they use shoppers' data.

The secret has been out for quite a while. Customers know you are using their data, so you may as well explain how you are using it to their benefit. Secrecy in retail data practices serves nobody.

Conclusion

Shoppers and retailers are engaged in a delicate dance — call it the Data Game. So long as your customers don't witness obvious abuses of your data collection powers, they may be content to assume the best.

But why leave so much unsaid about the way that you use customers' personal data? Why not explain all of the benefits that you are providing your shoppers, how you are using their data to improve the in-store experience?

Americans lack trust in virtually every major institution today, which presents a prime opportunity for retailers to restore shoppers' faith. If you can display not only that you are obtaining shoppers' data transparently and responsibly, but that you are doing so to the shopper's ultimate benefit, then you set your organization apart from retailers who refuse to be so honest about data.

Sixty-four percent of consumers told us they'll spend more at your stores if you can deliver a positive in-store experience. As I mentioned previously, 82% of shoppers will return to your store in the future when they have a good in-store experience. Data can help you deliver positive experiences — more targeted, personal, and value-driven experiences.

You can utilize customer data in a transparent manner that benefits all parties. Retailers and customers alike are better served by bringing data out of the darkness and into the light.

Bobby Marmahat is the CEO of Raydiant